Gold prices continued to languish at year-to-date lows despite the dollar turning negative and rising geopolitical tensions amid growing fears of a U.S.-China trade war.
Gold futures for August delivery on the Comex division of the New York Mercantile Exchange fell by $27.60 or 2.11 percent, to $1,280.70 a troy ounce.
The precious metal fell as the dollar posted a fresh 2018 high before profit taking sparked a reversal pressuring the greenback lower.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, fell by 0.13 percent to 94.80 after trading as high as 95.15.
The return of trade tensions, meanwhile, did little to spark demand for safe-haven gold after President Trump said the U.S. would impose a 25 percent tariff on billions of dollars of Chinese goods, and threatened further tariffs if Beijing decided to retaliate.
Beijing ignored Trump’s threats, however, vowing to immediately impose penalties of the “same scale” on American goods, raising the prospect of a tit-for-tat trade war between the world’s two largest economies.
Some cited gold’s breach of a key technical level around $1,307 as the catalyst for the selloff, which emerged just days after the Federal Reserve signalled a faster pace of rate hikes for this year and the next.
The odds of a fourth rate hike at the Fed’s December meeting has soared to 51.1 percent from 33.8 percent the previous week, according to Investing.com’s Fed Rate Monitor Tool.
In a rising interest rate environment, investor appetite for gold weakens as the opportunity cost of holding the precious metal increases relative to other interest-bearing assets such as bonds.
In other precious metal trade, silver futures fell 4.44 percent to $16.50 a troy ounce, while platinum futures fell 2.62 percent at $887.00 an ounce.